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NHAI hits the road to woo investors for Rs5,000 crore masala bond sale

LiveMint logoLiveMint 23-04-2017 Swaraj Singh Dhanjal

Mumbai: Minister of road transport and highways and shipping Nitin Gadkari will flag off international investor roadshows for the masala bond sale planned by National Highways Authority of India (NHAI) in Singapore on Monday, two people aware of the development said.

Masala bonds are rupee-denominated bonds sold in offshore capital markets.

“The roadshows are planned to take place over the next 15 days, starting with Singapore and will then move to Hong Kong, middle of the week and conclude in London in the second week of May. Gadkari will address investors at the Singapore leg of the roadshows on Monday,” said one of the two people aware of the development, requesting anonymity as he is not authorized to speak to reporters.

NHAI’s roadshows are being conducted by Axis Bank, Nomura, SBI Capital and Standard Chartered, which have been hired to manage the masala bond issuance, he added.

The proposed bond sale could see NHAI raise up to Rs5,000 crore, said the second person cited above, also requesting anonymity.

However, he added that the final size of the issuance, as well as the pricing of the bonds, will be firmed up only after the roadshows are wrapped up.

Emails sent on Friday to NHAI chairman Yudhvir Singh Malik went unanswered.

Masala bonds, a relatively new fundraising tool for Indian companies, received a tax boost in the Union budget, which exempted taxation on capital gains arising out of transfer of the rupee-denominated bond by a non-resident to a non-resident. The budget also extended a concessional withholding tax rate of 5% for three more years up to 30 June 2020.

The decision to levy tax deducted at source of 5% would be retrospectively effective from 1 April 2016, the government said in the budget.

World Bank arm International Finance Corp. (IFC) was the first to issue masala bonds in November 2014. It raised Rs1,000 crore to fund Indian infrastructure projects.

In March, Housing Development Finance Corp. Ltd (HDFC) raised about $504 million (about Rs3,300 crore) through masala bonds, to fund its business expansion, the company had said in stock exchange filings.

On Friday, The Economic Times reported that Temasek Holdings- owned Fullerton India Credit Co. is in advanced talks with IFC to privately place $100 million masala bonds with the latter. This is the second masala bond sale by Fullerton India, which had raised Rs500 crore in October.

State-owned enterprises other than NHAI are also planning to raise funds through the masala bond route.

Earlier this month, Piyush Goyal, minister for power, coal, and new and renewable energy, said that several firms such as NTPC Ltd, NLC India Ltd, Power Finance Corp. Ltd, PTC India Ltd and Rural Electrification Corp. Ltd are likely to sell masala bonds worth $1 billion in the next 3-4 months to raise funds from investors in the UK.

The funds will be used for financing the planned expansion of domestic renewable energy capacity.

NTPC raised Rs2,000 crore through green masala bonds in August 2016.

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